Motor firms submit second plan for government support

3 December 2008
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03 December 2008 | Jake Kanter

The "big three" US automotive firms have requested $32.2 billion (£21.8 billion) of loans from the US government.

According to their plans for financial assistance, Chrysler will use $9.2 billion (£6.2 billion) to pay its suppliers in the first three months of 2009, General Motors (GM) has also said it will use the money to support its vendors, while Ford intends to slash its supply base.

The second round of proposals from the car manufacturers follows the unwillingness of the US Senate and Congress to commit to a $25 billion (£16.6 billion) support package in November, without more detail of what the money would be used for (Web news, 25 November).

As part of its request Chrysler said it will need $8 billion (£5.4 billion) to pay parts suppliers and a further $1.2 billion (£8 million) to settle bills with other vendors at the start of next year. The company cited an "unprecedented" drop in vehicle sales as the reason for its total request of $11.2 billion (£7.6 billion).

Ford said it wanted $9 billion (£6.1 billion) in government loans to act as a "safeguard" while the company undergoes a transformation. As part of the overhaul Ford is dramatically reducing its supply base. Since 2004 the company has cut its vendor numbers from 3,400, to 1,600 and it will continue to make further reductions until it only has 750 suppliers.

GM has requested a loan of $12 billion (£8.1 billion) to provide it with "adequate liquidity" until December 2009. The company said it wants to invest $2.9 billion (£1.9 billion) in alternative fuels as it aims to create "green jobs" and help vendors.

The car firms will attend Congressional hearings on 8 December to learn if the new proposals have been successful.


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